EUR/USD Current Price: 1.0590
- Market participants struggle with recession signals and quantitative tightening.
- US Treasury yields pressure the upside, preventing the dollar from falling sharply.
- EUR/USD is neutral-to-bullish in the near term but still unable to overcome the 1.0600 threshold.
The EUR/USD pair peaked so far on Monday at 1.0614, although it quickly retreated from the level to trade just below the 1.0600 threshold. Mixed US data put pressure on the American currency after Wall Street’s opening, putting a halt to the previous USD recovery. At the same time, Asian and European stocks closed in the green, while Wall Street struggles to main the positive ground, all of which adds to the broad greenback's weakness.
Nevertheless, concerns about potential recessions around the world maintain gains among high-yielding assets limited. US indexes are barely escaping the bearish territory, even though prospects of an economic setback keep increasing for the US and the EU. Early on Monday, S&P downwardly reviewed economic growth. It now expects the EU economy to advance a modest 2.6%, while foresees US growth at 1.6%, well below the estimated potential growth rate of around 2%. Meanwhile, US government bond yields continue to seesaw up and down alongside market fears. The yield on the 10-year Treasury note peaked at 3.21%, now hovering nearby, up for the day.
Data-wise, US Durable Goods Orders were up 0.7% MoM in May, beating expectations, while Pending Home Sales in the same month plunged 13.6% YoY, much worse than anticipated. Also, the June Dallas Fed Manufacturing Business Index contracted to -17.7 from -7.3, missing the -3.1 expected.
The European Central Bank hosts this week the Forum on Central Banking in Portugal, and President Christine Lagarde offered the opening remarks. On Tuesday, several ECB members will be on the wires as per their participation in the aforementioned forum. The US, on the other hand, will release the May Trade Balance, June CB Consumer Confidence and the Richmond Fed Manufacturing Index for the same month.
EUR/USD short-term technical outlook
The EUR/USD pair holds on to intraday gains, but from a technical point of view, the bullish potential is limited. The daily chart shows that sellers are aligned at around a bearish 20 SMA, while the longer ones maintain their firmly bearish slopes far above the shorter one. Technical indicators, in the meantime, remain directionless within negative levels. At the same time, the pair is developing below a daily descendant trend line coming from this year’s high at 1.1494, currently at around 1.0670.
The 4-hour chart shows that the pair’s bias is neutral-to-bullish. Technical indicators stand directionless within positive levels, as the price struggles around a directionless 200 SMA while above the shorter ones. The EUR/USD pair has failed multiple times through June to gather momentum beyond the 1.0600 mark and would now require a break beyond the mentioned trend line to confirm a bullish continuation that could be anyway interrupted by fresh fears boosting the greenback.
Support levels: 1.0550 1.0520 1.0480
Resistance levels: 1.0600 1.0640 1.0675
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